Lunda Construction Company, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-0515

Lunda Construction Company,
Appellant,

vs.

County of Anoka,
Respondent.

Filed January 14, 2019
Reversed and remanded
Florey, Judge

Anoka County District Court
File No. 02-CV-17-244

Dean B. Thomson, Thomas V. Vollbrecht, Hugh D. Brown, Leon P. Wells, IV, Fabyanske,
Westra, Hart & Thomson, P.A., Minneapolis, Minnesota (for appellant)

Anthony C. Palumbo, Anoka County Attorney, Andrew T. Jackola, J ason J. Stover,
Assistant County Attorneys, Anoka, Minnesota (for respondent)

Aaron A. Dean, Moss & Barnett, P.A., Minneapolis, Minnesota (fo r amicus curiae
Associated General Contractors of Minnesota)

Considered and decided by Schel lhas, Presiding Judge; Reilly, Judge; and Florey,
Judge.
U N P U B L I S H E D O P I N I O N
FLOREY, Judge
In this appeal of the district court’s grant of summary judgmen t, appellant Lunda
Construction Company argues that the district court erred by (1 ) finding that appellant

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failed to satisfy its contractua l-conditions precedent and (2) enforcing the liquidated-
damages provisions contained in its contract with respondent An oka County. Because
there are genuine issues of material fact that preclude summary judgment, we reverse and
remand.
FACTS
I. The Parties’ Contract
In March 2015, respondent publicly opened bids for a highway-construction project
at the intersection of Highway 1 0 and Armstrong Boulevard in Ra msey, Minnesota. An
essential component of the project was the closing and reopening of Armstrong Boulevard.
Respondent’s request for bids identified specific work to be completed within 150 calendar
days following the May 4, 2015, closure of Armstrong Boulevard. As such, specific work,
including the reopening of Armst rong Boulevard, was to be compl eted by October 30,
2015. All remaining work was to be completed no later than May 27, 2016.
On April 14, 2015, appellant was awarded the construction proje ct, and later that
month, appellant and re spondent entered into a contractual agre e m e n t . T h e c o n t r a c t
consisted of three components: (1) the 2014 Standard Specificat ions for Construction
published by the Minnesota Depar tment of Transportation (MnDOT specifications);
(2) special provisions to the MnD OT specifications; and (3) two addenda. The special
provisions and the two addenda modified the terms of the MnDOT specifications. Where
the MnDOT specifications were not amended by the special provisions or the addenda, the
MnDOT specifications controlled.

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The definitions section provided t hat “State” or “Department” r eferred to
respondent, which was referenced as “Owner” in the contract, and the “Engineer” referred
to “the Engineer for the Owner.” Andrew Witter was respondent’ s designated project
engineer. “Contractor” referred to appellant.
A. Notice provisions
The parties’ contract included notice provisions, whereby appellant was required to
submit notice to respondent in order to pursue any claims that may arise from the project.
If a revision to the contract appeared necessary, appellant was to notify the engineer, Mr.
Witter, immediately. Appellant was instructed to “not start or continue with an activity or
Contract Item for which a Contract revision may be necessary without authorization from
the Engineer.” Pursuant to section 1402.1 of the MnDOT specifications, appellant’s failure
to provide requisite notice “c onstitute[d] a waiver of [appella nt’s] entitlement to
compensation or a time extension.”
Section 1403.3 provided that if appellant “disagree[d] with the Engineer’s
response,” it was required, within five business days, to provide a written notice, including,
among other things, a descripti on of the situation, an explanat ion of why the situation
represented a contract revision, and the proposed necessary rev isions. Section 1403.5
instructed the engineer to provi de a “final written response” w ithin ten business days of
receiving appellant’s written no tice. The engineer’s response was to confirm, deny, or
request additional information about appellant’s request for a contract revision.
Pursuant to section 1403.6, if appellant “disagree[d] with the Engineer’s final
written response,” and wished to take further action, appellant was required, within five

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business days, to “give the Engineer written notice of the intent to pursue a claim.” Section
S-20.2 (1517) of the special pr ovisions provided that appellant was required to “submit
[its] claim to the Engineer no later than 60 Calendar Days afte r receiving written notice
from the Engineer that direct damages (money or time due) resul ting from the claim has
occurred in the opinion of the Engineer.” If appellant’s claim was not submitted within the
60-day timeframe, appellant “waive[d] all claims for additional compensation in
connection with the work already performed.”
Under section 1402.5, appellant was required to get preapproval before performing
“Extra Work” as defined in the contract, otherwise, respondent could consider the work as
unauthorized and performed at appellant’s expense.
B. Liquidated-damages provisions
The parties’ contract contained three separate liquidated-damages provisions. Two
of the provisions subjected appellant to a combined total of $4 ,500 per calendar day for
work that remained incomplete after the agreed upon project dea dline of May 27, 2016.
Additionally, appellant was subjec t to $10,000 per calendar day for failure to complete
specific work, including the reopening of Armstrong Boulevard t o “unrestricted traffic,”
by October 30, 2015. There was also an incentive provision, re quiring respondent to pay
appellant $10,000 for each calenda r day that specified work was completed prior to the
deadline. The incentive amount was to be capped at $200,000.
II. Schedule delays
On April 23, 2015, work commenced, and by summer 2015, appellant encountered
issues impacting the project’s timeline. Accordingly, appellant submitted written notice of

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its potential claims, and on Septe mber 1, 2015, appellant and r espondent met to discuss
schedule delays and the resulting impact on the project. On September 11, 2015, appellant
submitted another “Notice of Pot ential Claim,” wherein it state d: “[P]ursuant of [sic]
Minnesota Department of Transportation Standard Specification 1517 this letter will serve
as a notice that Lunda is preserving our rights to file a claim for contract time extensions
and additional costs for the re-s equenced work, inefficiencies, rental equipment, and
mobilizations that are currently unknown at this time.”
On September 25, 2015, ten business days later, Mr. Witter sen t an email to
appellant’s vice president stating, “Please see the attached re sponse in regards to the
requested additional day for the TH 10 and Armstrong Interchange.” The email was signed
by Mr. Witter as “Assistant County Engineer.” Attached to Mr. Witter’s email was a letter
drafted and signed by Mr. Witter as “Assistant County Engineer.” The letter stated that it
was “[i]n response to [appellant’s] previously submitted scheduled impacts,” and it denied
appellant’s request for a time extension. The letter reiterated the agreed-upon completion
date of October 30, 2015, and stated respondent’s intention to begin deducting liquidated
damages for every day that the specified work remained incomplete. Specifically, the letter
stated:
I n C o n c l u s i o n , t h e o w n e r h a s d e t e r m i n e d t h a t t h e r e a r e n o
owner caused delays and in fact has helped mitigate the
Contractor’s schedule a minimum of 18 days, and therefore,
the 150 days bid by the contractor to complete the work as
described in Section S-12 of the Special Provisions, results in
a completion date of October 30, 2015 for this work, at which
time the County will begin deducting $10,000 per calendar day
for every day this work is not complete.

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On October 12, 2015, appellant’s vice president responded to the letter.1 The letter
opened by stating:
Dear Mr. Witter:

Please let this letter serve as our written response to your letter
dated September 25, 2015 and our intent to file a claim for
compensation and time extension per MnDOT Standard
Specification 1517.

The letter also stated a handful of times that the respective i ssues would be more fully
addressed in appellant’s “claim submittal.” Appellant did not, thereafter, file a claim
within the 60-day time period provided for in section S-20.2 (1 517) of the special
provisions.
2
The October 30, 2015 deadline was not met, but by December 31, 2015, Armstrong
Boulevard was reopened to the public. Between fall of 2015 and early 2016, the parties
allegedly continued to discuss “potential compromises,” and respondent did not deduct any
liquidated damages following the missed deadline of October 30.
On April 12, 2016, appellant’s vice president emailed Mr. Witte r asking for an
update since their latest meeting in early March 2016. On April 14, Mr. Witter responded,
stating that respondent would “ begin assessing damages on the n ext partial payment per
the project specifications.” That same day, appellant’s vice p resident responded, in both
email and letter form, stating appellant’s disagreement with re spondent’s position and its

1 Between respondent’s September 25 letter and appellant’s Octob er 12 response, the
parties apparently met to discuss a “recovery plan” for the construction project.
2 Section S-20.2 of the special provisions supplements section 1 517 of the MnDOT
specifications.

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intention to file a formal claim. Similar to the October 12, 2 015 letter, the April 14 letter
opened with:
Dear Mr. Witter:

Please let this letter serve as our written response to your email
dated April 14, 2016 (attached) and our intent to file a claim
for compensation and time extension per MnDOT Standard
Specification 1517.

The April 14 letter—similar to the October 12 letter—stated tha t “[f]urther details and
information will come with our Claim Submittal.”
On June 13, 2016, within the required 60-day timeframe, appella nt submitted its
claim to Mr. Witter “for direct damages (money and time due)” in connection with its work
on the Armstrong Boulevard interchange project. Respondent denied appellant’s claim in
its entirety, finding both that the claim lacked any merit and that appellant “failed to submit
its claim in a timely fashion” thereby waiving its right to recover damages.
III. Appellant’s lawsuit
In early January 2017, appellant c ommenced a lawsuit against re spondent. In
October 2017, both parties filed motions for summary judgment. The district court denied
appellant’s summary-judgment motion, granted respondent’s summary-judgment motion,
and dismissed with prejudice appellant’s claims. The court det ermined that respondent’s
September 25 letter served as “the Engineer’s final written res ponse,” thereby “triggering
the conditions precedent in Section 1403.6 and S-20.2 (1517).” It determined that because
appellant failed to satisfy the t w o c o n d i t i o n s p r e c e d e n t r e q u i red for obtaining a time

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extension, it waived its ability to recover any damages. The court also determined that the
liquidated damages against appellant were legally enforceable. This appeal followed.
D E C I S I O N
I. Genuine issues of material fact precluded summary judgment.

A. The September 25, 2015 letter
Appellant challenges the district court’s grant of summary judg ment, arguing that
the court erred by summarily dismissing all of its claims for a n alleged failure to comply
with the contract’s notice provisions.
“On appeal from summary judgment, we review whether there are a ny genuine
issues of material fact and whether the district court erred in its application of the law.”
STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 76 (Minn. 2002). We must
view the evidence in the light m ost favorable to the party agai nst whom judgment was
granted. Id. at 76-77. We review de novo both whether a genuine issue of ma terial fact
exists and whether the district court erred in its application of the law. Id. at 77; see also
Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 364 (Minn. 2009).
“A material fact is one that will affect the outcome or result of a case.” Laska v.
Anoka County, 696 N.W.2d 133, 140 (Minn. App. 2005), review denied (Minn. Aug. 16,
2005). There is no genuine issue of material fact “if the record taken as a whole could not
lead a rational trier of fact to find for the nonmoving party.” Carlson v. SALA Architects,
Inc., 732 N.W.2d 324, 327 (Minn. A pp. 2007) (quotation omitted), review denied (Minn.
Aug. 21, 2007). To defeat a motion for summary judgment, the nonmoving party must do
more than “merely create[] a metaphysical doubt as to a factual issue.” Ariola v. City of

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Stillwater, 889 N.W.2d 340, 353 (Minn. App. 2017) (quotation omitted), review denied
(Minn. Apr. 18, 2017). The nonmoving party must present suffic ient evidence to allow
reasonable persons to find in its favor. Carlson, 732 N.W.2d at 327. Because summary
judgment is a “blunt instrum ent . . . [it] is inappropriate whe n reasonable persons might
draw different conclusions from the evidence presented.” Ariola, 889 N.W.2d at 353
(quotation omitted). At the summa ry-judgment stage, the distri ct court “may not weigh
the evidence or make factual determinations” nor “assess, evaluate, or determine credibility
of the evidence.” Carlson, 732 N.W.2d at 327 (quotation omitted).
Whether respondent’s September 25 letter constituted the engin eer’s final written
response, triggering the two con tractual conditions precedent t o preserving appellant’s
claim, is a factual question. Although the parties suggest that the letter involves a question
of law, we conclude otherwise. The outcome of the case depends not on our interpretation
of a particular contract provisi on—indeed, the contract does no t define “the Engineer’s
final written response.” Rather, the case will be decided according to whether, as a matter
of fact, the September 25 letter was the engineer’s final writt en response triggering the
conditions precedent for bringing a claim forward.
“A condition precedent is a contract term that calls for the performance of some act
or the happening of some event after the contract is entered into, and upon the performance
or happening of which the promisor’s obligation is made to depe nd.” Capistrant v.
Lifetouch Nat’l Sch. Studios, Inc. , 916 N.W.2d 23, 27 (Minn. 2 018) (quotation omitted).
Parties to a contract may expressly agree that written notice o f a claim is a condition
precedent to seeking recovery. Valspar, 764 N.W.2d at 365; Buchman Plumbing Co., Inc.

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v. Regents of the Univ. of Minn., 215 N.W.2d 479, 486 (Minn. 1974) (adopting the district
court’s finding that “written not ice of claim was a condition p recedent to [appellant’s]
action”). That a party forfeited its claim under a contractual condition precedent must be
established with “clear and unmistakable proof.” Capistrant v. Lifetouch Nat’l Sch.
Studios, Inc. , 899 N.W.2d 844, 854 (Minn. App. 2017), rev’d on other grounds , 916
N.W.2d 23 (Minn. 2018).
Appellant argues the contractual conditions precedent were not triggered by the
September 25, 2015 letter because (1) the letter was a determin ation of respondent, the
owner, not a final written response of the engineer triggering appellant’s notice obligations
under section 1403.6, and (2) the letter was written before the October 30, 2015, deadline,
thereby precluding any po ssibility that direct damage had occurred in the opinion of the
engineer pursuant to section S-20.2.
Appellant submits that following the September 25 letter, discu ssions between the
parties regarding appellant’s claims and respondent’s threat to assess liquidated damages
continued up until respondent’s em ail dated April 14, 2016. It contends that if the letter
constituted the engineer’s final written response, respondent w ould have begun assessing
liquidated damages on October 31, 2015, rather than waiting until May 2016.
Respondent argues that the distr ict court correctly determined that the September
25 letter was the engineer’s final written response and that appellant waived its claims by
failing to provide timely notice. It contends that appellant’s October 12 response
demonstrates its understanding that the September 25 letter tri ggered the conditions
precedent for bringing a claim fo rward. Respondent submits tha t it never gave appellant

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any indication that it was rec onsidering its decision to assess liquidated damages, and its
reason for not deducting any amou nt until May 2016 was because appellant specifically
asked that respondent refrain from assessment while the parties were considering potential
resolutions.
Whether the September 25 letter constituted the engineer’s fina l written response,
triggering the two contractual conditions precedent, is a fact that is in dispute. First, “final
written response” by the engineer is undefined in the contract. Second, the September 25
letter fails to expressly state that it was serving as the engi neer’s final written response.
And, finally, it is unclear whether the letter was signed by Mr. Witter in his capacity as the
designated project engineer as required by the contract. That the September 25 letter
triggered appellant’s notice obligations is a disputed fact that, no doubt, has a direct impact
on the outcome of the case.
To defeat respondent’s motion for summary judgment, appellant d id more than
“merely create[] a metaphysical d oubt as to a factual issue.” See Ariola, 889 N.W.2d at
353. Appellant submitted affidav its, depositions, and copies of relevant written
communications between the parties, as evidence to permit reasonable persons to find that
the September 25 letter did not constitute the engineer’s final written response. For
example, appellant’s vice president stated in his affidavit tha t “almost immediately after
[respondent’s] September 25, 2015 letter—on September 28, 2015—I personally met with
[respondent’s] project engineer, Andrew Witter” wherein “we dis cussed and agreed to a
recovery plan for the Project construction.” Attached to the affidavit was a copy of a letter
from Mr. Witter to appellant’s vice president confirming the September 28 meeting.

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The vice president’s affidavit also alleged that “Mr. Witter ex pressly noted
[respondent’s] willingness to listen to and consider [appellant’s] proposed solutions.” And,
as support, appellant attached a January 2016 email communicati on from Mr. Witter to
appellant’s vice president statin g that although respondent wou ld not accept appellant’s
initial proposed solution, it “wou ld be willing to entertain an other proposal should
[appellant] desire.”
We review the evidence in the light most favorable to appellant , the party against
whom judgment was granted. STAR, 644 N.W.2d at 76-77. Because appellant produced
sufficient evidence to allow reasonable persons to find in its favor, and, at this stage in the
proceedings, it was improper for the district court to make any factual determinations, the
genuine fact issues precluded the grant of summary judgment.
B. The liquidated damages assessed against appellant
Appellant argues that the district court erred by enforcing the liquidated-damages
provisions because they were unenforceable penalties. It argues that respondent not only
failed to show that the three different provisions were reasonable amounts, but that it failed
to show that it suffered any actual damages. Appellant submits that it did not have any
negotiating power because, had appellant tried to negotiate the amounts, respondent would
have rejected its bid.
Although these arguments need not be addressed until the questions surrounding the
September 25 letter are resolved, we provide the following anal ysis and conclusion to
provide clarity on the issue and guidance for the parties in th e event that the liquidated-
damages provisions apply.

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Liquidated-damages provisions ar e prima facie valid in Minnesot a. See Gorco
Constr. Co. v. Stein, 99 N.W.2d 69, 74 (Minn. 1959). Courts “look with candor, if not with
favor, upon a contract provision for liquidated damages when en tered into deliberately
between parties who have equality of opportunity for understand ing and insisting upon
their rights.” Id. A predetermined liquidated sum “saves the time of courts, juries, parties,
and witnesses and reduces the delay, uncertainty, and expense of litigation.” Id. However,
liquidated damages that, in effect, act to penalize are invalid. Id.
In determining the validity of the liquidated-damages provisions, we look not to the
parties’ intent, but ask “whether the amount agreed upon is rea sonable or unreasonable in
the light of the contract as a whole, the nature of the damages contemplated, and the
surrounding circumstances.” Id. “[W]hen the measure of dam ages . . . is susceptible of
definite measurement, we have uniformly held an amount greatly disproportionate to be a
penalty.” Id. at 75. The party challenging the provisions bears the burden of showing they
are invalid. See id. at 74.
Appellant fails to meet this burden. Appellant has not offered any supporting
evidence to suggest that the amounts were unreasonable or that they were susceptible of
definite measurement at the time the contract was formed. Inde ed, the parties’ contract
explicitly stated: “In view of the difficulty in making a preci se determination of actual
damages incurred, the Department will assess a daily charge not a s a p e n a l t y b u t a s
liquidated damages to compensate the Department for the additional costs incurred.”
The difficult nature of calculating damages in public-works con tracts was
corroborated by affirmations or testimony from at least three different Anoka and MnDOT

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employees. Furthermore, appellant’s vice president testified t hat, in 2015, all of its ten
projects had liquidated-damages provisions in its contracts. The vice president stated that
those provisions have included amounts of $10,000 per day, and even as high as $50,000
per day. Lastly, we are not persuaded by appellant’s argument that it lacked any
negotiation power. Appellant is a sophisticated, experienced p arty, and there is no
suggestion that it was compelled to submit its project bid or enter into a binding agreement
with respondent.
Appellant also argues that the t hree different provisions were not supposed to be
enforced together; rather, the two smaller amounts were suppose d to be subsets of the
$10,000 figure, not amounts in addition to that assessment. This understanding is contrary
to the plain language of the contract. The respective contract provisions provided that the
daily liquidated damages charge of $1,000 was “[i]n addition to ” the daily charge of
$10,000, which was “[i]n addition to” the daily charge of $3,500.
Furthermore, the record indicates that appellant was well aware that the three
provisions were to be applied independently of each other. App ellant’s vice president
agreed in his deposition that appellant was subject to “both MnDOT’s 3,500 and then also
this separate $10,000 amount.” He agreed that “there would be a third category of
liquidated damages that would appl y to this project, a thousand dollars per each day the
work remained incomplete after that May 27, 2016, date.”
Based on the plain language of the contract, the sophistication of the parties, and
appellant’s failure to present ev idence indicating either that respondent’s damages were

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readily ascertainable or that the amounts were unreasonable und er the circumstances, we
conclude the district court did not err by enforcing the liquidated-damages provisions.
That being said, looking at the evidence in the light most favorable to appellant, we
conclude there was a genuine issue of material fact regarding the exact amount of damages
to be assessed.3 Appellant submits that Armstrong Boulevard was reopened to the public
by December 31, 2015, and therefor e, it was inappropriate for r espondent to continue
assessing a daily liquidated damage charge of $10,000 beyond th at date. Respondent, on
the other hand, contends that as of December 31, “substantial w ork still remained to be
completed” including “all lighting, signing, signals, and guard rails.” It contends that the
“remaining work was significant, and took [appellant] until June 2016 to complete.”
Whether the specified work was completed by December 31, 2015, or sometime
before June 2016, is a question of fact in dispute, and at this stage in the proceedings, the
evidence allows reasonable perso ns to come to different conclus ions. Because the total
amount of liquidated damages is a genuine fact issue, the distr ict court erred in granting
respondent’s summary-judgment motion.
Reversed and remanded.

3 We note that despite the parties’ experience and sophistication in contracts of this nature,
their failure to clearly enforce their respective rights under the contract has significantly
contributed to the existence of genuine issues of material fact on both the conditions
precedent and liquidated damages issues.